People were concerned that the market will start pricing in the argument that the central bank will raise interest rates to a neutral level since deflation in Japan has ended. Yields will have a bias to rise.

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A sell off in the longer end may continue. A 2 percent yield, not only a coupon, is needed to digest the auction.

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Yields on bonds, especially five-year and shorter debt, will have a bias to rise. Fukui didn't necessarily deny a possible policy shift and I still see an almost 100 percent chance for an April move.

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